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NEW JERSEY State Incentives

NEW JERSEY PARTNERSHIP FOR ACTION: A three-pronged public-private approach to economic development and the starting point for all initiatives, policies and efforts to grow New Jersey’s economy and create quality, sustainable jobs in our communities. The three elements of the Partnership include Choose New Jersey, an independently funded and operated 501(c)(3) nonprofit corporation created to encourage and nurture economic growth throughout New Jersey; the Business Action Center, which reports directly to the Lieutenant Governor and provides the business community with a single point of contact, applying a proactive, customer-service approach to businesses’ interactions with State government; and, the New Jersey Economic Development Authority (EDA), serving as the state’s “bank for business.”

The ECONOMIC REDEVELOPMENT AND GROWTH (ERG) PROGRAM is a reimbursement incentive that enables developers to use up to 75 percent of new State and/or local incremental taxes generated from a project to fund financing gaps. The program provides up to 20 percent of the total project cost, paid out over a period of up to 20 years. Redevelopment projects in qualifying areas that have secured a municipal ordinance and demonstrated sufficient net benefits may be eligible for assistance.

URBAN TRANSIT HUB TAX CREDIT PROGRAM: A financial tool designed to spur private capital investment, business development and employment by providing tax credits for businesses planning a large expansion or relocating to one of New Jersey’s designated Urban Transit Hubs. The program offers developers, owners or tenants up to 100 percent of a qualified capital investment made within an eight period. Taxpayers may apply 10 percent of the total credit amount per year over a ten-year period against their corporate business tax, insurance premiums tax or gross income tax liability. Developers or owners must make a minimum $50 million capital investment in a single business facility, and at least 250 full-time employees must work at that facility. Tenants in a qualified business facility can represent at least $17.5 million of the capital investment in the facility, and up to three tenants may aggregate to meet the 250 employee requirement.

The BUSINESS EMPLOYMENT INCENTIVE PROGRAM (BEIP) is a powerful incentive that encourages businesses to locate and expand in New Jersey. Approved businesses receive annual cash grants based on the number of new jobs created in the State. In order to qualify, businesses must create at least 25 new jobs within a 2-year period; emerging high technology and biotech companies’ eligibility threshold is 10 new jobs. A business must also demonstrate that the BEIP grant is a “material” factor in moving the job expansion or relocation forward in New Jersey, and that it is economically viable. The standard BEIP incentive is limited at 50 percent of the employees’ state income taxes withheld on the newly created jobs; however, companies that meet certain Smart Growth objectives can have their grant boosted to 80 percent. Qualifying businesses may be eligible for up to 10 years worth of grants, though they must maintain the project and the jobs in New Jersey for at least 1.5 times the number of years the grant is in effect.

The BUSINESS RETENTION & RELOCATION ASSISTANCE GRANT (BRRAG) is a recently enhanced program designed to help companies preserve jobs, expand operations and reinvest in New Jersey. The program provides corporate business tax credits to companies that are relocating operations within New Jersey and retaining at least 50 full-time jobs. Up to $2,250 per year for up to six years is now available per each job retained in the State. The award amount is dependent on the application of “bonus credits,” which may be available for the relocation of jobs to urban centers, and/or for a capital investment at least twice that of the value of the awarded credits. The number of times the yearly tax credit amount is awarded is dependent on the number of retained jobs. Companies must commit to remaining in the State for the tax credit term and an additional five years. For leased project locations, the business must sign a written lease for a period of no less than the commitment duration or eight years, whichever is greater. The total amount of credits that can be applied against a single company’s tax liability in a fiscal year may not exceed $10 million.

SALES AND USE TAX EXEMPTION PROGRAM (STX), a program often used in conjunction with BRRAG that offers companies a sales tax exemption certificate which applies only to property purchased for installation at the approved project site. This certificate allows the business to purchase machinery, equipment, furniture, fixtures, and building materials for the project without the imposition of the state’s 7 percent sales tax. Eligible companies must have 1,000 or more employees in New Jersey and relocate 500 or more to a new business location. Life sciences or manufacturing companies may be eligible if they relocate 250 or more employees to a new facility. Companies must maintain the retained full-time jobs in New Jersey for five years.

BOND FINANCING: A creditworthy manufacturing company, a 501(c)(3) not-for-profit organization or an exempt facility in New Jersey can apply for long-term financing under the Bond Financing Program. $500,000 to $10 million in tax-exempt bonds for for-profit companies, with either a fixed or variable interest rate, and terms up to 20 years for real estate and 10 years for equipment. Or, $500,000 with no dollar limit in tax-exempt bonds for qualified not-for-profit organizations.

Tax-exempt bonds for eligible for-profit companies can be used to finance capital improvements and expansions, including real estate acquisitions, new equipment, machinery, building construction, and renovations. Tax-exempt bonds for not-for-profit organizations seeking capital to expand community services can be used to finance land and building acquisitions, new construction and renovations, equipment purchases, debt refinancing and working capital. Government tax-exempt bonds can be used for projects that are owned and operated for the benefit of local, county and state government bodies.

SMALL BUSINESS FUND: An expedited approval process provides financial assistance to qualified businesses through direct loans or guarantees, with the choice of a variable or fixed interest rate. A small, minority-owned or women-owned business in NJ in operation for at least one full year or not-for-profit corporation in operation for at least three full years may qualify for up to $300,000 for credit scores greater than or equal to 700; up to $125,000 for credit scores greater than or equal to 650; and up to $300,000 for Not-for-Profits with 1.1X historical debt service coverage. It may be used for fixed assets and working capital.

ENERGY EFFICIENCY REVOLVING LOAN FUND (EE RLF): New Jersey-based commercial, institutional or industrial entities (including 501(c)(3) organizations) that have received an approved Energy Reduction Plan under the NJ Board of Public Utilities’ Pay for Performance program may be eligible for supplemental financing through the EE RLF. Also eligible are those entities participating in the NJ Board of Public Utilities’ Large Energy Users Pilot Program. Financing, in the form of low-interest loans, can be used to support up to 80 percent of total eligible project costs, not to exceed $2.5 million or 100 percent of total eligible project costs from all public State funding sources. Funds can be used for whole-building energy improvements.

NEW JERSEY BUSINESS GROWTH FUND: A joint program of the EDA and PNC Bank. Small or mid-sized companies that are creating or retaining jobs in NJ can apply for financing of up to a $3 million bank loan with a 25 percent or 50 percent EDA guarantee. The maximum EDA guarantee is $1.5 million. It can be used for the funding of real estate or equipment. Companies must commit to create one full-time job in NJ for every $50,000 of guarantee provided by the EDA with the exception of manufacturers, which must commit to maintain one existing full-time job in New Jersey per $50,000.

A qualified manufacturer of Class I renewable energy or energy efficiency systems, products or technologies may be eligible for up to $3.3 million in grants and loans for project assessment and design, and project construction and operation associated with a new manufacturing line or the material expansion of an existing line of a New Jersey manufacturing facility.

EDISON INNOVATION ANGEL GROWTH FUND: Leverages private angel investors in support of early-stage, emerging technology businesses in a less dilutive manner than equity. An angel supported NJ-based technology company with minimum trailing 12 month commercial revenues of $500,000 derived from core business activities, such as the sale of technology products can apply for growth capital of up to $250,000 to be used for key hires, product rollout, product enhancement and marketing/sales.

MAIN STREET BUSINESS ASSISTANCE PROGRAM: Provides financial support to commercial banks in New Jersey to provide financial assistance to small and mid-sized businesses and not-for-profit organizations with projects in NJ. It can provide direct loans, bank term loan participations and/or guarantees and line of credit guarantees for small or mid-sized business or not-for-profit organizations in operation in NJ for at least two years. Can be used for fixed assets, refinancing of debt or working capital.

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